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Corporate Law and Governance > Company Formation and Constitution > Flashcards

Company Formation and Constitution Flashcards

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1
Q

2.1. Definition of a Promoter

A

Re: Twycross v Grant (1877)

  • who undertakes to form a company for a given project
  • gets it going
  • takes the necessary steps to accomplish that purpose
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2
Q

2.1. Duties of a Promoter

'’3DS PLC’’

A
  • Due skill and care in performing the task
  • Fiduciary duty - act in good faith
  • Duty of disclosure: full, honest and clear
  • Substantial property transactions - individual valuation
  • PLC: Disclosure of prelim. expenses
  • Disclosure in interest in contracts/ txns in past 5 yrs
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3
Q

2.1. Duties of a Promoter

Erlanger (1873)

A

Promoter cannot use his position to obtain secret profits - disclosure needed.

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4
Q

2.1. Duties of a Promoter

Hopkins (1972)

A
  • Sale of land & vessels

- Failure to disclose profits made

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5
Q

2.1. Breach of Duties of a Promoter

A
  • company can withdraw txn
  • seek for damages
  • surrender any profits obtained secretly
  • if promoters = controllers, shareholders can take action (co. suing itself)
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6
Q

2.1. Pre-incorporation contracts

A
  • Issue of validity : contract with co. not yet incorporated
  • Co. bound for contracts entered by promoter
  • Liquidation before ratification: liquidator ratifies contract
  • No ratification: promoter MAY be liable
    - disclaimer of liability
    - should say ‘‘not legally binding until ratified’’
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7
Q

2.2. Memorandum of Association sets out …

A

… powers and objectives of the co. within which the company must act (external).

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8
Q

2.2. Articles of Association set out …

A

… rules and regulations as to how the co. exercises its powers and functions (internal).

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9
Q

2.4. Pre-2014, ways of alteration of Articles of Association

A

Special resolution

   - in accordance with the Law and Memorandum
   - Bona fide, in best interest
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10
Q

2.5. Form that the Constitution of an LTD takes

A
  • Simplified one document Constitution
  • Old M&A deemed to be new Constitution (less Objects clause)
  • Signed by each member and witnessed
  • Must set out conditions upon which co is granted incorporation
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11
Q

2.5. Constitution of an LTD includes

A
  • Co. name
  • Mention: ‘limited by shares’
  • Mention: ‘limited liability’
  • No shares of each subscriber
  • If co. adopts supplementary regulations and which
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12
Q

2.6. Form A1 includes

A
  • Co name
  • Reg office
  • Email
  • Secretary
  • Directors
  • Subscribers
  • Declaration of Compliance with CA
  • Type of activity
  • Nature of business
  • Statement of co. capital
  • Proposed place of business
  • Proposed place of central administration
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13
Q

2.7. LTD - Altering its Constitution

A
  • Only in cases provided y the Act

- Special Resolution: delivered CRO with other docs to be publicated in CRO Gazette

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14
Q

2.8. Legal effect of the Constitution

A
  • Certificate of Incorporation: proof that co. is registered
  • Members entitled to a copy - offence
  • Statutory contract between company and members
  • Personal right to enforce contract as members
  • Outsiders can sometimes use the Constitution for drawing conclusions in a separate contract
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15
Q

2.9. Certificate of Incorporation

A
  • Issued by CRO after Form A1 received
  • ‘Birth cert’ of the co.
  • Published note in CRO Gazette when received
  • Evidence that the co. is in compliance with CA and can commence trading
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16
Q

2.9. Certificate of Trading

A
  • Required for PLC, otherwise struck off
  • Application to CRO in prescribed form
  • Application with Statutory Declaration that incl.:
    - Nominal value of share cap. (min 25,000)
    - Amount of sh. cap. paid up (min 25%)
    - Prelim expenses
    - Intended remuneration to promoters
17
Q

2.10. Choosing the name of a company - rules

A

*Business Names Act 1963

‘Undesirable’ name:

  • offensive, immoral, blasphemous
  • suggesting connection with gov. auth.
  • permission from Minister for inclusion of ‘bank’, ‘society’, ‘co-op’, ‘insurance’
  • including reg trademark without consent
  • misleading, similar
  • same name as other co.
  • Obligation to display company’s name correctly on all documents, including address
  • Fines or personal liability
  • Penrose (1858)
18
Q

2.10. Trading under a misleading name

A

Giving the impression that is any other co. than a LTD co. or that is any type of body corporate.

19
Q

2.10. Company’s registered office

A
  • co. legal address
  • where legal docs can be sent to
  • where statutory docs, register of members are required to be kept
  • notification to CRO prior incorporation and on any change
  • Cat 4 offence

Corporate Law and Governance (5 decks)

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